Henry Schein 2014 Annual Report Download - page 72

Download and view the complete annual report

Please find page 72 of the 2014 Henry Schein annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 131

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131

58
With respect to time-based restricted stock/units, we estimate the fair value on the date of grant based on our
closing stock price. With respect to performance-based restricted stock/units, the number of shares that ultimately
vest and are received by the recipient is based upon our performance as measured against specified targets over a
three-year period as determined by the Compensation Committee of the Board of Directors. Although there is no
guarantee that performance targets will be achieved, we estimate the fair value of performance-based restricted
stock/units based on our closing stock price at time of grant. Adjustments to the performance-based restricted
stock/units targets are provided for significant events such as acquisitions, divestitures, new business ventures,
share repurchases and certain foreign exchange fluctuations. Over the performance period, the number of shares of
common stock that will ultimately vest and be issued and the related compensation expense is adjusted upward or
downward based upon our estimation of achieving such performance targets. The ultimate number of shares
delivered to recipients and the related compensation cost recognized as an expense will be based on our actual
performance metrics as defined.
Although we believe our judgments, estimates and/or assumptions related to stock-based compensation are
reasonable, making material changes to such judgments, estimates and/or assumptions could materially affect our
financial results.
Recently Issued Accounting Standards
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with
Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under accounting
principles generally accepted in United States (“U.S. GAAP”). The core principle of ASU 2014-09 is to recognize
revenues when promised goods or services are transferred to customers in an amount that reflects the consideration
to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to
achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue
recognition process than are required under existing U.S. GAAP.
The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein,
using either of the following transition methods: (i) a full retrospective approach reflecting the application of the
standard in each prior reporting period with the option to elect certain practical expedients; or (ii) a retrospective
approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which
includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU
2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt
the standard in 2017.